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Task force: Raise hotel tax to pay for convention center expansion

Kaya Pino of Toronto relaxes on a balcony at the Austin Convention Center during the South by Southwest festival on March 10, 2017.JAY JANNER / AMERICAN-STATESMAN

Posted: 6:02 p.m. Thursday, May 25, 2017

A city task force is recommending that the Austin City Council vote to expand the convention center downtown and pay for the $609 million addition with a 2-cent hike in the city’s hotel occupancy tax, the group’s chairman said.

The 2-cent increase would create about $24 million a year, said James Russell, who led the Visitor Impact Task Force. The convention center would sell bonds against its portion of the new revenue to finance the expansion over time, Russell said.

The task force’s vote came this week after six months of studying a range of issues, including a proposal to enlarge the convention center at Trinity and East Cesar Chavez streets and potential ways to fund it.

The 18 voting members of the task force represent hotel, music, arts, parks, special events and other sectors. Their recommendations will now be presented to the Austin City Council.

The task force recommended against the city buying any new land for the expansion. Rather, it suggests the city work with the private sector to lease land and build a project with a mix of uses that could include commercial or residential structures atop lower-level convention facilities.

Long-term leases with property owners, Russell said, would allow businesses in the several blocks just west of the convention center that are being eyed for expansion to continue to operate. And he said there was “a good consensus” among members against removing any property from the tax rolls.

City officials previously have discussed the option of initiating legal condemnation proceedings of any private property, should it be needed for an expansion. If the Council approves the task force’s recommendation, that option would be off the table, Russell said.

However, David Green, a city spokesman, said: “It is too soon to say at this point.”

“No decisions have been made and it would be inappropriate for us to speculate prior to the task force presenting its formal recommendations to the City Council,” Green said.

Russell said he was “passionate” about the idea of the expansion being part of a new mixed-use project that could include an office and/or residential tower, and perhaps even some affordable housing.

“Because there are no current designs of what it could or would look like, we made strong recommendations that any expansion be part of the fabric of the ecosystem of downtown and not build another box that is not an active part of the community when there are not conventions gong on,” Russell said. “

Another recommendation calls for maintaining the existing downtown street grid, with no street closures.

The recommendations will next be reviewed by staff members in the city’s legal and other departments, Green said. They will then get a final review by the task force before being sent to the City Council.

Visit Austin, formerly known as the Austin Convention & Visitors Bureau, and the Austin Convention Center Department have been pushing to gain support for an expansion — a proposal some critics question.

This week, Bill Bunch, an Austin activist, sued the Visit Austin over documents he said it is withholding in violation of state open-records laws. Bunch said he is seeking information that would show how Visit Austin is spending its money at a time when it is asking for more funds to expand, yet the organization has been “hiding the details about whether that’s a worthwhile investment of public funds or not.”

Visit Austin released released some information to Bunch, his attorney Bill Aleshire and the American-Statesman on Wednesday, but Aleshire said the information is incomplete and the lawsuit will proceed until all the requested information is provided.

Aleshire said the convention center is losing over $24 million a year now, with a center that Visit Austin claims is full.

“If (Visit Austin0 and the city can’t balance the budget with this center, what makes anyone believe they won’t just have a bigger convention center with a bigger busted budget?” Aleshire said.

But on a Facebook page representing hundreds of Austinites in support of the proposed expansion, Visit Austin says the city’s economy lost out on more than $480 million from 2015-2016 from turning away more than half of convention center booking requests because it wasn’t large enough or it was already booked.

In an email, Mark Tester, director of the Austin Convention Center Department, said the department is pleased that the task force’s recommendation “supports the Convention Center’s Long Range Master Plan” calling for an expansion.

“We will begin exploring the additional(recommendations) as we continue with our process of preparing for a Council decision,” Tester said.

Scott Joslove, president and CEO of the Texas Hotel & Lodging Association, said the group “fully supports the task force recommendations to use the local hotel tax to expand the convention center and to invest additional local hotel tax funds toward historic, cultural, and arts related assets” in the city.

“We also fully support the recommendation of the community task force that the City Council approve a tourism public improvement district that can augment the funding for tourism promotion of Austin — all without the need to use any city general funds,” Joslove said.

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